Apple, Amazon, Google, Others on Patent Pain Front

(MoneyWatch)  Stories of small companies suing larger companies right and left -- sometimes with a firm belief that they've been wronged, other times with a firm belief that being just annoying enough but not too so gets you a settlement -- are nothing new. But when you have one that has a key patent which the US Patent and Trademark Office uphold on multiple occasions and which successfully whooped on a tech giant, it's something that makes tech companies take notice. Especially when many are vulnerable to similar suit. That's the case for Eolas, which apparently has a lock on embedding and running objects within hyperlinked documents, at least that's what Microsoft found. And there's a long list of companies now being sued.

This, my friends, is going to be a major to-do. The patent was fairly broad reaching and now there's a second patent that extends the first. Microsoft kept pushing back, but eventually, after years of contention, finally settled for ... $585 million. That's one big number. Now consider that since it has shown a solid win, Eolas could argue that new infringers should have known that their actions were illegal and should bear a multiplier for willful infringement. Given that the company settled with Microsoft in 2007, what's delayed things until now? My guess is that the waited until all the Microsoft cash was in, just in case something went wrong in new court battles and the folks in Redmond tried to renege, which also would happen to give them a good-sized legal war chest. I'd also bet that Eolas tried for some time to get other potential defendants to settle ahead of time. In fact, for all we know, some major ones did.

The list of new plaintiffs is actually stunning in its scope: Adobe Systems, Amazon, Apple, Blockbuster, Citigroup, eBay, Frito-Lay, Go Daddy, Google, J.C. Penney, JPMorgan Chase, Office Depot, Perot Systems, Playboy Enterprises, Staples, Sun Microsystems, Texas Instruments, Yahoo, and YouTube. It's also easy to see that many other companies could be added to the list. Could it be that Eolas will lose? Sure, but remember that they've also filed to get preliminary and permanent injunctions. Given the hammer that Microsoft is facing in potentially being prevented from selling Office, the potential of such a move has to be making a lot of lawyers nervous.

As Ars Technica pointed out, the Bilski case in the Supreme Court could have an influence. However, the site was wrong in saying that it was about whether software should be patentable. The issues are a bit more subtle, and even should the Supreme Court rule against Bilski, we'd have the interesting situation in which the patent, at the time of infringement, had been declared valid multiple times. What would this do to a suit? Hard to tell, but it will be interesting to see how many companies are willing to wait and take their chances, or settle for a definite amount and know they are clear.

Image via stock.xchng user gmarcelo, site standard license.